The price we pay for living in California can be taxing — literally.
The Tax Foundation pegged April 23 as Tax Freedom Day for America as a whole. That means for the first 113 days of 2017, a typical American worked just to pay all federal, state and local taxes. That, by the way, excludes users fees such as for water and sewer service. In California, the 2017 Tax Freedom Day fell on May 1 some eight days later. That means 31.8 percent of a typical Californian’s earnings go to pay taxes.
What brings this up is the rhetoric surrounding the federal tax reform and how it underscores that the people who live in the Pacific Heights neighborhood of San Francisco are really different than those that live in the Woodward Park neighborhood of Manteca. Pacific Heights is an exclusive enclave with million dollar views of the Golden Gate where people are more aligned with the infamous “1 Percent” than the rest of us. Woodward Park is primarily a commuter neighborhood of families with tract homes where household incomes that for the most part barely crest six figures are eroded by commute expenses.
One of those Woodward Park residents I know is among the workers that are getting a one-time bonus of $1,000 as a result of a decision their employer made based on the federal tax reform.
They plan to use the money — after Uncle Sam and Uncle Jerry get their cuts — to either do a couple of small projects around the house or cover most of the cost of a new washer and dryer.
Congresswoman Nancy Pelosi lives in Pacific Heights. She believes the federal tax reform will be an economic disaster robbing Congress of the ability to spend money without a massive increase in the federal deficit. She has characterized the bonuses that corporations have committed to giving employees now that the federal corporate tax rate has been sliced from 35 to 21 percent as “crumbs” compared to what the firms are getting.
All things, as they say, are relative. When you’re grossing $55,000 a year, getting a $1,000 bonus is more like a slice or two of bread than mere crumbs.
Someone in Pacific Heights might drop that kind of change on a pair of shoes without blinking an eye whereas someone making $55,000 spending $65 on a pair of Converse for their kid may have to skip a trip or two to Starbucks to squeeze the purchase into the budget.
Estimates put the number of employees firms committing to pay $1,000 bonuses at 2 million so far. That’s $2 billion. And that doesn’t include the people that companies are raising to $15 an hour because they can afford to do so after the tax reform was implemented.
Then there’s the “crumbs” that most of us will get in the form of a few dollars a week in federal taxes taken from our pay checks.
A dollar here and a dollar there adds up.
Even it is just $100 less a year that Uncle Sam takes it will mean a working stiff Californian driving a car worth less than $5,000 will at least be able to tread water in 2018.
That’s because they are being slapped with a $50 surcharge — the low end of a sliding $50 to $175 road fee based on vehicle value — that goes into effect this year to help repair roads. That’s on top of the 12 cents a gallon increase in the gas tax. When all is said and done, the the guy getting a $100 tax break from Washington, D.C., will end up having the money taken from him by the state.
So in a way the politicians of the same ilk that slam the federal tax cuts as bad for the little guy as it will only give them “crumbs” have made sure that the little guy doesn’t even get the “crumbs” in California.
It’s obvious road repairs are needed in California. That said, you noticed with $4 billion in additional revenue that is surfacing in Sacramento not one politician has said that some of that money should be diverted towards roads to suspend the implementation of the DMV charge for a year. Instead they’re tripping over each other to push new spending initiatives.
The “crumbs” I’m likely to get from the tax reform will reduce the amount of additional money taxes the state is commandeering.
As far as big corporations being able to make more investments or even pay more dividends due to slashing the corporate tax rate, I’m not the least bit envious. The more money they get — even if it is to buy their own stock back — the more money that goes into circulation.
Rising economic waters do indeed lift all boats.
Those of us in rubber life rafts that are living paycheck to paycheck or close to it aren’t envious of those 1 percent folks in the yachts. That’s because the rising water means we’re not likely to snag on jagged economic rocks that can puncture our rafts and sink us.
Frankly you’re happy just to be able to fill your stomach that you could care less if you’re having hamburger and fries at McDonald’s you drive to in a 1995 Toyota Camry that someone out there is having filet mignon and lobster at a 5 Star restaurant after arriving in a 2017 Lamborghini.
It goes without saying that one man’s crumbs is another man’s lunch.